Benidict Hoffman Reports That Fed Remains Upbeat About US Economy While Noting Downgraded Growth Predictions.
TAIPEI, Taiwan--(BUSINESS WIRE)--Apr 5, 2019--Taipei based institutional asset management company, Benidict Hoffman has reported on the recent meeting on Wednesday, the US Federal Reserve maintained an optimistic tone about the state of the US economy but also downgraded its growth forecast for this year and next and indicated that it would probably not increase interest rates this year.
This ends a three year-long rate hike cycle and economists at Benidict Hoffman say this reflects a slowdown in the US economy which is feeling the effects of US President Trump’s trade war with China.
While Trump, who has long called for lower interest rates, should be happy that the Fed has decided to hold interest rates steady, Benidict Hoffman economists say it is not possible to have a strong US economy while the Fed sees no reason to increase interest rates.
The Fed downgraded its growth forecast for this year to 2.1 percent, down from the 2.3 percent it predicted in December last year and significantly lower than the 3.2 percent growth forecast by the White House.
In 2020, the Fed expects growth to slow to 1.9 percent with the Fed reporting weakness in consumer spending and business investment and mentioning the slowdown in Europe and China’s economic growth.
Employment growth in the US is also showing signs of cooling as it loses some of last year’s momentum.
The Fed also stated that it intends to slow the decline of its assets in May and halt them altogether by December after allowing them to fall over the past two years.
Although Fed Chairman Jerome Powell attempted to offer reassurance regarding the state of the US economy, markets responded quickly to the Fed’s policy shift causing the dollar to fall against the yen and the euro.
Economists at Benidict Hoffman say it is unlikely that weakening global growth and the trade war between the US and China will end soon and this could continue to have a negative impact on US economic growth prospects.
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SOURCE: BENIDICT HOFFMAN
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PUB: 04/05/2019 06:06 AM/DISC: 04/05/2019 06:05 AM